Economics and the Great Depression Essential Question: What are the basic principles of

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Economics and the Great Depression Essential Question: What are the basic principles of

Topic:
Economics and the
Great Depression
Essential Question:
What are the basic principles of
economics?
 Capitalism
 Also called a market economy or a free-enterprise
system
 Adam Smith of Scotland
 Father of capitalism
 Three natural laws of economics:
 Law of self-interest
 Three natural laws of economics:
 Law of self-interest
 Law of supply and demand
 Supply
 The amount of a good that businesses are
willing to offer for sale
 Demand
 The amount of a good that people are willing
and able to buy
 Demand
 The amount of a good that people are willing
and able to buy
 Law of competition
 The amount of a good that people are willing
and able to buy
 Law of competition
 Role of government:
 Laissez-faire
 Government should not interfere with business
 Government should
 Protect property rights
 Enforce contracts
 Allow free trade
 Enforce contracts
 Allow free trade
 Discuss
 Adam Smith
 Self-interest
 Supply and demand
 Competition
 Role of government
 Write a sentence describing how one
of the following affects prices:
 Supply and demand
 Competition
 Enforce contracts
 Allow free trade
 Other important principles:
 Scarcity
 Exists because of
unlimited human wants
and needs in a world
with limited resources
 Scarcity
 Exists because of unlimited human wants and needs
in a world with limited resources
 Opportunity cost
 Exists because of scarcity
 What you give up for your economic choices
 Exists because of scarcity
 What you give up for your economic choices
 Financial Planning
 Credit
 Allows you to buy now and pay later
 Problems with using credit:
 Debt
 Interest
 Debt
 Interest
 Some types of credit:
 Credit card
 Auto loan
 Mortgage
 Student loan
 Mortgage
 Student loan
 Investment
 Putting up money in the hope of gaining a profit later
 Some types of personal investments:
 Savings account
 Some types of personal investments:
 Savings account
 Stocks
 Shares of ownership in a company
 Mutual funds
 Spread investments across many companies
 Example of diversification
 Spread investments across many companies
 Example of diversification
 Discuss
 Scarcity
 Opportunity cost
 Credit
 Investment
 Write a sentence describing an example of an
opportunity cost
 Spread investments across many companies
 Example of diversification
 The Great Depression (1929-1939)
 Causes:
 Natural business cycles
 Causes:
 Natural business cycles
 High tariffs reduced international
trade
 Bad investments
 Led to Black Tuesday: the stock
market crash
 Bad investments
 Led to Black Tuesday: the stock market crash
 The Dust Bowl (1930-1936)
 Severe dust storms on the prairies
 The Dust Bowl (1930-1936)
 Severe dust storms on the prairies
 Responses to the Depression
 President Herbert Hoover
 Laissez-faire
 Homeless moved to “Hoovervilles”
 Laissez-faire
 Homeless moved to “Hoovervilles”
 President Franklin D. Roosevelt
 The New Deal
 Three goals (the three Rs):
 Relief
 Recovery
 Reform
 Recovery
 Reform
 Sometimes called “Alphabet Soup”
 Reform
 Sometimes called “Alphabet Soup”
 The Depression ended because of World War II
 Sometimes called “Alphabet Soup”
 The Depression ended because of World War II
 Discuss
 Causes of the Great Depression
 Responses to the Great Depression
 Write a sentence
comparing/contrasting Hoover’s and
FDR’s responses to the Great
Depression